Correlation Between Dollar General and Tootsie Roll
Can any of the company-specific risk be diversified away by investing in both Dollar General and Tootsie Roll at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Dollar General and Tootsie Roll into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dollar General and Tootsie Roll Industries, you can compare the effects of market volatilities on Dollar General and Tootsie Roll and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Dollar General with a short position of Tootsie Roll. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollar General and Tootsie Roll.
Diversification Opportunities for Dollar General and Tootsie Roll
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dollar and Tootsie is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Dollar General and Tootsie Roll Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tootsie Roll Industries and Dollar General is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Dollar General are associated (or correlated) with Tootsie Roll. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tootsie Roll Industries has no effect on the direction of Dollar General i.e., Dollar General and Tootsie Roll go up and down completely randomly.
Pair Corralation between Dollar General and Tootsie Roll
Allowing for the 90-day total investment horizon Dollar General is expected to under-perform the Tootsie Roll. In addition to that, Dollar General is 1.39 times more volatile than Tootsie Roll Industries. It trades about -0.21 of its total potential returns per unit of risk. Tootsie Roll Industries is currently generating about 0.35 per unit of volatility. If you would invest 2,975 in Tootsie Roll Industries on August 24, 2024 and sell it today you would earn a total of 319.00 from holding Tootsie Roll Industries or generate 10.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dollar General vs. Tootsie Roll Industries
Performance |
| Timeline |
| Dollar General |
| Tootsie Roll Industries |
Dollar General and Tootsie Roll Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dollar General and Tootsie Roll
The main advantage of trading using opposite Dollar General and Tootsie Roll positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollar General position performs unexpectedly, Tootsie Roll can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Tootsie Roll will offset losses from the drop in Tootsie Roll's long position.| Dollar General vs. BJs Wholesale Club | Dollar General vs. Costco Wholesale Corp | Dollar General vs. Walmart | Dollar General vs. Dollar Tree |
| Tootsie Roll vs. Mondelez International | Tootsie Roll vs. Hershey Co | Tootsie Roll vs. Rocky Mountain Chocolate | Tootsie Roll vs. Chocoladefabriken Lindt Sprngli |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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